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The Silly Trump Government Shutdown, Still the Economy Expands

The Silly Trump Government Shutdown, Still the Economy Expands

It is difficult to explain, but the Trump Government shutdown was supposed to hurt the economy, well it did damage it at all……why are economists getting it wrong then?

From October 2018 until February 2019, the entire market was expecting a weak growth period for the United States and China but recently China reported solid GDP figures at 6.4% beating forecasts. The US was also expected to see a slowdown but the first-quarter gross domestic product expanded by 3.2%, the Bureau of Economic Analysis said in the initial read of the economy for the quarter.

This 3.2% expansion was the best start, first quarter on the year, since 2015. This is then the best start in four years betting the 2.5% forecast by most economists. So both the US and China have surprised on the upside for economic expansion.

How is this possible? How can so many well trained bankers and broker analysts get this wrong? The answer is that many of them do not understand the current changes in the economies. Or it could be that the number of people who are ignoring changes in the economy.

But here is an answer provided by Pter Boockar of Bleakley Advisory Group. “The upside beat was helped by the net trade (exports jumped while imports contracted sharply), and inventories which combined contribution almost 170 bps of the rise,” according to Boockar.  Exports rose 3.7% in the first quarter, while imports decreased by 3.7% in that same period. Disposable personal income increased by 3%, while prices increased by 1.3% when excluding food and energy.

Despite the government shutdown, which was the longest in history, the US economy fared well.

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